Birkin bag maker Hermes expands manufacturing with new French workshop

FILE PHOTO: An employee holds an Hermes diamond and Himalayan Nilo Crocodile Birkin handbag at Heritage Auctions offices in Beverly Hills, California Thomson Reuters PARIS (Reuters) - French luxury handbag maker Hermes said on Friday it had opened a new manufacturing plant in eastern France, as rivals like LVMH's Louis Vuitton also expand leather goods production to keep up with thriving Chinese demand.

Hermes, known for its squared silk scarves as well as its hand-stitched $10,000 Kelly or Birkin bags, trades off its "Made in France" appeal and is famed for attracting long waiting lists.

Like luxury peers, Hermes benefited from strong appetite from Asian shoppers in 2017, lifting its sales and profits to record levels.

In the fourth quarter, sales growth slowed slightly from the previous three months, however, as stocks of its handbags ran low.

Hermes, originally a saddle and equestrian equipment maker, said its 16th leather goods workshop, located in the country not far from the city of Mulhouse, would eventually house 260 specialists trained to hand-craft a bag from start to finish.

Vuitton is also expanding its leather goods production with at least two new domestic workshops this year and next.

Hermes has tended to pick sites in rural areas for its plants, hiring locally and training staff-in house, for workshops of around 300 people maximum.

Hermes also plans two more production sites in France by 2020, and currently employs around 3,310 leather goods workers making everything from saddles to wallets.

France's manufacturing sector has seen a burst of renewed job creation recently, after almost two decades of rapid de-industrialisation.

The industrial sector saw its first net job creation since 2001 in the last three months of 2017, national statistics showed last month.